Understanding Peter's Principle

“Peter's Principle,” a theory formulated by Dr. Laurence J. Peter and Raymond Hull in their 1969 book, The Peter Principle, holds that “an hierarchical organization tends to promote competent employees to the next level, and so on, until a point comes when the employee gets promoted to a level beyond [his] competency.” The point at which the employee is not able to perform competency to earn further promotions becomes his level of incompetence.

The earliest elucidation of the core concept of Peter’s Principle was in 1767 by Gotthold Ephraim Lessing, in his comedy Minna von Barnhelm. He quotes “To become something more than a sergeant! I do not think of that. I am a good sergeant; I might easily make a bad captain, and certainly a worse general.”

Promoted as a humorous treatise, the stark reality of this theory has made it one of the most oft-quoted and well-established management theories. Most organizations base their promotions on the competence the employee displays at the existing level rather than the untested potential at the proposed level.

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Peter’s Principle does not hold the people having reached their level of incompetence as unfit for the position. It rather states that higher-ranking jobs demand different core competencies than the employee’s previous core competencies. The new requirements might not be among the strong points of the employee.

For instance, a brilliant software programmer might earn promotion as a manager. Knowledge of programming, however, becomes a secondary factor in a managerial position, where people management skills become the core competency required. The promoted employee’s skills in people management might be ordinary. The skills that earned the employee the promotion in the first place are no longer a core skill in the new position, and the employee, not excelling in the core skill of the present position, remains stuck in the position.

Employees looking to further their career would therefore do well to understand how Peter’s Principle works and avoid falling into the trap of reaching their own level of incompetence. The way to do so is to understand the core skills required for success in the present level and the next level and undertake an honest self appraisal to determine whether one has the necessary skill and expertise to meet and exceed the role expectations. The options available for the individual include:

1. Making career choices based on one's core skills and interests.
2. Understanding one’s own limitation, not seeking promotion to the next level of hierarchy and instead continuing to excel at the existing level.
3. Making a conscious and determined effort to inculcate the required skills to excel at the next level.

The implication of Peter’s Principle extends to how to decide on a career. Many people choose a career not because they are good in the subject but because of many other reasons such as the challenge, the peer pressure, the pay, promotion opportunities, and other issues. For instance, many mathematicians would be superb accountants, but they commonly reject such a career as unfulfilling and repetitive.

Peter’s Principle provides an indirect message to base career choice factors on one's likes, one's inclinations, and one's natural abilities. Failure to do so would mean reaching the level of incompetence very soon in the hierarchy.

The second option for the individual to avoid being trapped in a level of incompetency is to remain at the position one excels at and become an over-achiever.

Peter's book itself contains many real-world examples of what happens when one fails to understand one’s own limitations. A classic example is Adolph Hitler. His charisma and oratorical skills made him a successful politician. He however reached his "level of incompetence" as commander-in-chief of the Wehrmacht, for he did not possess the required skills of flexibility. The rigidity of his decision-making did not allow retreats when necessary according to the tactical situation.

A solution offered by Peter is a caste or social stratification system where, for instance, organizations provide technical people valuable for their skills but poor managers with parallel career paths that allow them to earn the pay and status reserved for management.

Employees having reached their level of incompetence can still aspire to move further up the hierarchy. Career advancement tips in this direction include:

• Undertaking personality tests and exercises such as the Myers Briggs Type Indicator and Johari Window that reveal much about one’s own personality and nature, to have a greater understanding of the self and base the results of such tests for necessary remedial action.
• Indulge in a program of constant learning or self improvement.
• Implementing concepts such as Total Quality Management on an individual level.

1. Alessandro Pluchino, Andrea Rapisarda, & Cesare Garofalo. The Peter Principle Revisited: A Computational Study. http://arxiv.org/abs/0907.0455
2. Lazear, Edward, P. The Peter Principle: Promotions and Declining Productivity. Stanford University. http://www-siepr.stanford.edu/Papers/pdf/00-04.pdf